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Hodgson: World Environment Day Business Breakfast

Hon Pete Hodgson
Minister for Economic Development
Minister for Research Science & Technology

4 June 2008 Speech
World Environment Day Business Breakfast
Embargoed until 8.00am
Speech given at the World Environment Day Business Breakfast at the Royal New Zealand Yacht Squadron Curran St, Auckland


Good morning and welcome. In particular I would like to welcome Achim Steiner, Executive Director of the United Nations Environment Programme

It is an honour for New Zealand to be hosting World Environment Day tomorrow and for us to be able to showcase to the world the work that we are doing around sustainability.

In the last few years, we have seen a clear and unmistakable shift in business attitudes towards sustainability. Whereas previously sustainability was seen by some as a threat best avoided or contained, today, smart, progressive firms see sustainability as a necessary condition of doing business and as an opportunity for differentiating their goods and services from those of others.

The key drivers for business are these:

• Regardless of the climate change "debate", the fact of the matter is that countries are responding to the threat of climate change by seeking to manage their greenhouse gas emissions.

• The likelihood is that the pressure on countries to curb their emissions will intensify.

• Consumers and retailers in some of our key markets are becoming much more demanding and discriminating about embedded carbon, and in some cases about other environmental issues too.

• There is a risk that, in responding to environmental challenges, some countries may limit market access for goods and services that are perceived to not be environmentally-friendly .

Clearly, each firm will need to respond differently to these drivers, but today no firm can afford to ignore the fundamental and permanent changes that are taking place.

New Zealand has a solid reputation as a country which is both clean and green and where business is conducted fairly and honestly. This is a significant asset.

Moreover, New Zealand has the necessary ingredients to be a world-leading exponent of smart, innovative and business-savvy solutions to environmental problems. We have rich natural resources, including renewable energy, matched with strong science and research capabilities.

For example, in New Zealand's largest business, pastoral farming, there is world-leading research being conducted into the mitigation of agricultural greenhouse gases. Half New Zealand’s total greenhouse gas emissions are from the agricultural sector. But agriculture is a significant contributor in other countries as well. Worldwide, agriculture accounts for approximately 13 to 14 percent of global GHG emissions. New Zealand-led science and business have the potential to position us at the forefront in solving these problems.

Government’s approach to the issues

The government is seeking to work in partnership with business, local government and other stakeholders to ensure that the transition to a more sustainable New Zealand is as smooth as possible.

Environmental sustainability and economic growth are not mutually exclusive. In fact in many ways they are complementary.

Finding smart, innovative and business-savvy solutions to environmental problems is one way New Zealand can increase the value of the goods and services it produces and thus increase the living standards of all New Zealanders.

That is why sustainability is a key theme of the government's economic transformation agenda.

The government is working to address sustainability issues through a broad range of policies and initiatives affecting business and households.

A specific issue that has been at the forefront of the government's drive towards a low-carbon economy is sustainable energy.

Sustainable energy

Our energy use is a major contributor to our greenhouse gas emissions.

The government is taking a broad-based approach - from generation to transmission and demand - to ensure New Zealand has a reliable and resilient system that delivers sustainable, low emissions energy.

About 65 per cent of our electricity is already generated from renewable sources. Through the New Zealand Energy Strategy the government has set a goal that 90 per cent of electricity be generated by renewable sources by 2025.

To deliver on this, we are restricting the development of fossil fuel baseload electricity generation for the next 10 years by proposing amendments to the Electricity Act currently under Parliamentary scrutiny.

We are also developing a National Policy Statement on Renewable Electricity Generation under the Resource Management Act to provide clearer guidance to councils.

As well as generating more of our electricity from renewable sources, we need to be more efficient with the electricity we use.

To help the business sector, the New Zealand Energy Efficiency and Conservation Strategy lays out enhanced grant, audit and technology programmes for New Zealand businesses, including $700,000 for programmes targeting the export sector.

It is only by taking such a broad approach to all aspects of electricity that we will be able to make in-roads into reducing the associated carbon emissions.

Budget decisions

Regarding renewable and low carbon energy more generally, last month’s Budget allocated $32.5 million of new funding over four years to energy research. That’s in addition to the $20 million being spent annually on existing energy research funding.

About $10 million of this will be spent on longer term research across the range of renewable energy sources, such as biofuels, wind, marine, solar, and hydro power, to investigate ways of integrating variable renewable energy resources into New Zealand's energy networks and infrastructure.

Another $4 million will fund the Low Carbon Energy Technologies Fund, which has been set up to take the good ideas for energy solutions out of the lab and get them ready for commercial investment and deployment.

A further $14.5 million will be used to support renewable energy research opportunities that are particularly valuable for New Zealand because of our unique renewable energy resources, our expertise and our needs.

Emissions Trading

Turning now to the proposed Emissions Trading Scheme, this is the cornerstone of New Zealand’s response to climate change. It will cover all sectors of the economy and all six greenhouse gases in the Kyoto Protocol.

The scheme is designed to produce a price signal that changes people’s behaviour and investment decisions, moving New Zealand gradually to a low-emissions and more resilient economy over the longer term.

It is difficult to predict how individuals and businesses will adjust their behaviour on introduction of the emissions trading scheme. But history suggests that when faced with adequate incentives and the means to do so, they will manage to reduce their emissions far more successfully and quickly than currently appears possible. That is why ‘price-based’ schemes like the emissions trading scheme, supported by other initiatives, can be effective in dealing with this type of problem.

Any structural change to the economy comes with adjustment costs. The government is designing the emissions trading scheme in ways that minimise and fairly share these costs. We will also closely monitor progress and act to reduce any negative impacts.

We expect that the current concerns with details of the scheme can be, and will be, ironed out in the Select Committee process. The government looks forward to working collaboratively with all those involved as it constructs an emissions trading scheme that will work for New Zealanders in the long term. The earlier our economy adapts to a world in which a price is put on emissions, the more time we will have to respond in a way that ensures that New Zealand can remain competitive internationally and take advantage of business opportunities from supplying low-emissions products and services.

Other sustainability initiatives

The government is leading by example through programmes such as the Carbon Neutral Public Service programme, which has put 34 government agencies on the path towards carbon neutrality by 2012. We hope that by sharing our experiences with the public and industry, we can help businesses achieve their own carbon neutral goals.

Through the Ministry of Economic Development, the government is working with key sectors to increase their capability to manage their greenhouse gas emissions. The essence of this work is to give firms the measurement tools which they need to help establish the environmental integrity of their goods and services in world markets.

The government is also using its own purchasing power to create a demand for goods and services that are more sustainable , thus encouraging New Zealand firms to become sustainable.

Closing remarks

Business is leading the way too, as evidenced by the number of businesspeople here today.

In August, Auckland will host the 4th Annual Australia – New Zealand Climate Change and Business Conference, focusing on the risks and opportunities facing business as a result of climate change. This is reflective of the move away from questioning whether climate change is happening, to businesses taking practical action.

Climate change not only presents challenges, but also opportunities: for business and for New Zealand. In closing I challenge all of you here today to think critically about the opportunities that exist for your business,

But more importantly, I challenge you to act. And to act now so that New Zealand businesses make the most of first mover advantage.

Thank you.


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